The first half of 2019 was a busy one for California’s illegal cannabis industry. In a state that has struggled with the enforcement of the illicit side of cannabis, the state Bureau of Cannabis Control served 19 search warrants on unlicensed sellers of marijuana. Through their efforts, the bureau confiscated over $200,000 in cash from illegal operations and seized more than 2,500 pounds of black-market marijuana, worth $16.5 million.

Year One

In 2018, the first year California’s legal recreational market began issuing licenses, the Bureau collaborated with local law enforcement across the states; six search warrants were served to unlicensed cannabis stores. The result was the seizure of almost 1,600 pounds of pot with a value of over $13 million.

Lindsay Robinson, executive director of the California Cannabis Industry Association, noted that thousands of unlicensed retailers operate, and by relation, the number of enforcement actions should be higher, adding that locating the illegal retail operations should be easy because, like the legitimate pot shops, they advertise. Despite the uptick in raids by the bureau, the California Cannabis Industry Association called the enforcement efforts “severely inadequate.”

Black Market

Despite the criticism, in the last year, California authorities have tripled the number of raids on illegal pot shops, and to enhance enforcement, last month California Governor Gavin Newsom authorized fines of up to $30,000 per day for unlicensed cannabis growers. Despite these efforts, the black market remains strong.

When California voters approved Proposition 64 in 2016, where state-licensed operators were allowed to grow and sell recreational marijuana, many thought the black market would be curbed. That remains to be seen, as industry officials maintain that there are thousands of illegal operations and that enforcement is still inadequate.

Staffing

An audit by the state Department of Finance found that the bureau’s staffing and facilities are “not sustainable to provide effective and comprehensive oversight of cannabis activities throughout California.”

California had a year to create a new bureau, and to draft regulations and procedures to license the newly formed market, and state officials agree there are problems — from cities refusing to allow cannabis sales and the issuance of fewer cannabis licenses than anticipated — to high state and local taxes, which can add up to 45% to the cost of operating with a license. These conditions make it difficult to develop and enforce a comprehensive regulatory system.

State auditors found that 15 of 68 positions in the bureau’s Enforcement Unit had been filled. The bureau had different figures, noting that they had, in fact, filled 26 of the 68 positions. Despite this, less than half of the authorized enforcement positions have been filled, and the audit revealed that with the staffing numbers currently in place, the ability of the bureau to process complaints, perform inspections and investigate is severely reduced. The bureau does not employ sworn peace officers and instead relies on assistance from local law enforcement.

Collaborate and Counteract

In June, the Costa Mesa Police Department served warrants on behalf of the bureau on two unlicensed cannabis shops, and $2.7 million in illegal cannabis products was seized. That is to-date the largest single-day seizure by the bureau. Additionally, separate enforcement efforts have been initiated by the California Department of Fish and WIldlife, in cooperation with the Trinity County Sheriff’s office. They served 15 warrants and seized over 12,000 illegal cannabis plants, in addition to over 800 pounds of processed marijuana, along with firearms and almost a half-million dollars in cash.

Critics estimate that California’s black market was worth $3.7 billion in 2018, which is four times that of the legal market. Efforts to counteract that includes tougher enforcement and a new “Get #weedwise” public education campaign from the bureau. The campaign urges consumers to buy their cannabis from licensed operators and warns illegal, unlicensed players of the potential for cash fines and product confiscation for not playing by the rules.

About Brian Ellis

With 6 years' experience in business journalism, Brian is the person we turn to for anything related to the business of cannabis. His news coverage spans topics including marijuana business and finance. Brian's work features on themarijuanapages.com, marijuanareferral.com, , marijuanamerchantaccount.com and marijuanainsuranceagent.com.